Spotlights: Twinkie chronicles; market stature; NEH likes ND

Published: Spring 2002

In 1930 the head of a company that baked sponge cakes for strawberry shortcake was trying to think of a way to continue selling the cakes when strawberries were out of season. He also liked the thought of keeping his bakers employed longer during those Depression years.

His idea: Poke a hole in the spongecakes — which back then were shaped like little loaves instead of the familiar shallow bowls of today — and fill them with banana cream. The Twinkie was born.

The University’s executive chef, Denis Ellis, described the origins and evolution of the Twinkie last fall in a talk to local young people about careers in the food industry.

During World War II, he said, a shortage of bananas led to the substitution of vanilla cream filling, which continues today. As for the name, it came to the snack cake’s inventor, Jimmy Dewar of Chicago’s Continental Baking Company, when he passed a billboard while on a train in Saint Louis. The sign advertised Twinkle Toe Shoes.

Wishful cutting

Many business managers can’t resist cutting prices, but they need to learn some self-control, says a Notre Dame marketing professor.

Writing in last October’s Harvard Business Journal, Joel E. Urbany said that when managers were asked to choose between a guaranteed level of sales and profits at a certain price or cutting prices and possibly boosting sales, most managers chose the price cut – even though the hypothetical made plain that they’d make the same profit in either case.

Urbany says the price-cutting bias comes from a widespread belief that cutting prices leads to gains in market share that will translate into higher profits down the road. But more often than not, he says, cuts are quickly matched by competitors, any gain in market share is short-lived, and overall industry profits end up failing.

It’s hard to estimate sales, costs and profits at different prices or predict competitors’ reactions, Urbany acknowledges. But if managers ignore the complexities and ambiguities of pricing, he says, they may end up “leaving significant sums of money on the table.”

ND the favorite of NEH

With four more National Endowment for the Humanities fellowships last year, Notre Dame’s total for the past three years reached 13, the most of any university.